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McDonald's Hit With Allegations Of 'Pipeline Of Discrimination' Toward Black Franchisees

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McDonald's Hit With Allegations Of 'Pipeline Of Discrimination' Toward Black Franchisees

Mcdonald's Corp (NYSE: MCD) faces a new class action lawsuit filed by Black franchisees, Business Insider reported.

What Happened: James Byrd. Jr. and Darrell Byrd, brothers who own four McDonald's locations in Tennessee, are named as plaintiffs in the lawsuit filed Thursday against McDonald's. 

The class action suit was filed in the U.S. District Court for the Northern District of Illinois Eastern Division.

McDonald's operates a "pipeline of discrimination that has plagued Black franchisees for decades," according to the complaint.

This action follows a late August lawsuit filed by more than 50 former McDonald's franchisees.

Related Link: An Encouraging Sign For McDonald's (With Help From Travis Scott)

James Ferraro is representing the plaintiffs in the two lawsuits.

"We've had literally dozens and dozens of former owners calling us about their desire to go after McDonald's, but also the fear that they have that McDonald's would literally close them down," he reportedly said Thursday. 

Why It's Important: The total number of Black McDonald's franchisees has decreased from 377 in 1998 to 186 today.

All of the Black franchisees could join the class action suit. 

It is in McDonald's best interest to help all franchisees maintain "successful and profitable restaurants," the company told Business Insider. 

"With respect to the named plaintiffs in this complaint, Jim and Darryl Byrd, McDonald's has invested significantly in each of their respective businesses after they ran into business difficulties caused by mismanagement of their organizations," the statement said. 

What's Next: The lawsuit is seeking damages of $4 million to $5 million per store, and the total damages sought could exceed $1 billion, according to Business Insider.

MCD Price Action: McDonald's shares were down 1.49% at $211.75 at last check Friday. 

 

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